DEE HWA LIONG ACADEMY

Sta. Maria Compound, Marcos Highway, Santolan, Pasig City

BUYING AND SELLING

Lesson 9:
Break-Even Point Analysis
Prepared by:
KELVIN ROY L. SAN MATEO
Mathematics Teacher
 “UNLOCKING OF TERMINOLOGIES AND
CONCEPTS”
a) Profit – is the amount of money left after all the
costs and payables have been deducted from
the earnings generated.
b) Revenue – money that is made by or paid to a
business or an organization i.e. earnings.
c) Loss – is the amount of money that still needs to
be settled after all the costs and payables have
been deducted from the earnings generated,
 ILLUSTRATION
a) A carinderia owner earned a total of P5,650.00 for the day.
Looking at her notebook, she noted that she has spent a
total of P3,125.00 on the same day to cover all the
ingredients and other things she used for her store.
Determine her profit for the day, if any.
b) Juan sells bracelets to earn extra cash. He sells them for
P20.00 each. To produce one bracelet, he spends P17.00
for the needed materials. How much is his profit if he was
able to sell 21 bracelets?
Profit  Revenue  Cost Loss  Revenue  Cost
Revenue  Cost Revenue  Cost
 ILLUSTRATION
a) A small sari-sari store earned a total of P7,124.00 last
month. On the other hand, its expenses included
P5,145.00 for groceries and P2,100.00 for electricity. How
much was its profit, if any?
b) Betty plans to sell customized bags in an upcoming
bazaar. To create one bag, she has to spend P412.00 for
the materials, and she will sell it for P450.00. To
participate in the bazaar, she has to pay participation and
rental fees totaling P5,000.00. If she was able to create
130 bags, and she believes she can sell them all, should
she participate in the bazaar?
 “UNLOCKING OF TERMINOLOGIES AND
CONCEPTS”
d) Fixed Cost – are costs such as rent, salaries,
advertising and other overhead costs that
remain the same no matter how much of the
product is manufactured or sold
e) Variable Cost – are costs such as raw materials,
payment for packaging, direct labor, and energy
that vary or change directly with the amount of
product produced and sold.
 “UNLOCKING OF TERMINOLOGIES AND
CONCEPTS”
y
Break-even – a business is in
break-even if the total revenue Revenue Line

generated is equal to the total

Cost Line
cost incurred. The intersection BEP = (BEQ, BER)

of revenue line and the cost x

line is what we called the
break-even point.
 “DETERMINING BREAK EVEN POINT”
Formula to be used
P  x  R  x  C  x Profit Function

R  x   SP  No. of Units Sold Revenue Line

C  x   Fixed Cost  Variable Cost Cost Line

0  R  x   C  x 
BEP 
 R  x   C  x 
 ILLUSTRATION
a) ABC Co. sells its product at P16.00 per unit. The
variable cost is P6.00 and the fixed cost is P2000.00.
Determine the (a) Total Revenue, Total Cost, and the
Profit Function, (b) Number of units to be sold if profit is
P5000.00 (c) Profit when sales are 800 units and (d) The
break-even Point.
b) A factory sells its product at P10.00 per unit. The
variable cost is P4.00 per unit and its fixed cost is
P4000.00. Determine the (a) Total Revenue, Total Cost,
and the Profit Function (b) Sales volume when profit is
P8000.00 and (c) Profit when sales are 800 units.
 ILLUSTRATION
c) XYZ manufactures and sells its product at P40.00 per unit
with a variable cost of P30.00 per unit. Fixed cost is
P10000.00. Determine the following: (a) profit when sales
are 2000 units, (b) Break-even quantity and revenue (c)
Sales when profit is P5000, and (d) The amount to
decrease or increase the fixed cost to break-even at 500
units if VC and SP per unit remain constant.